Social Security and Marriage: How It Affects You
Are you wondering how your marital status affects your Social Security benefits? Do you know how divorce or widowhood might impact your payouts?
In their book Get What's Yours, authors Laurence J. Kotlikoff, Philip Moeller, and Paul Solman dive deep into Social Security and marriage. They explore how different life events can significantly influence your benefits and provide strategies to maximize your payouts.
Keep reading to learn more about how marriage, divorce, and widowhood can affect your Social Security benefits and what you can do to make the most of them.
How Marriage Impacts Your Social Security Benefits
When it comes to Social Security and marriage, your marital status can significantly affect your benefits. Whether you're married, divorced, or widowed, understanding the rules surrounding Social Security and marriage can help you maximize your payouts over your lifetime.
Benefits for Married Couples
If you're married, you have some unique options for claiming Social Security benefits. For example, you might be able to claim spousal benefits based on your partner's work record. This can be especially beneficial if one spouse earned significantly more than the other during their working years.
One strategy that used to be popular was the "file-and-suspend" tactic. This allowed one spouse to file for benefits and then immediately suspend them, allowing the other spouse to claim spousal benefits. However, the 2015 Bipartisan Budget Act eliminated this option for most people.
Despite these changes, married couples still have opportunities to maximize their benefits. For instance, it's often advantageous for the lower-earning spouse to delay claiming their own benefits until age 70. This strategy can ensure that the surviving spouse will receive higher survivor benefits based on the higher earner's record.
Divorce and Social Security
If you've been divorced, you might still be eligible for benefits based on your ex-spouse's work record. Here are some key points to remember:
- Your marriage must have lasted at least 10 years
- You must be currently unmarried
- You must be at least 62 years old
If you meet these criteria, you can claim benefits on your ex-spouse's record without affecting their benefits or those of their current spouse.
Interestingly, for those who were 62 or older by January 2, 2016, there's a special provision. You can choose to receive full spousal benefits at your Full Retirement Age and then switch to your own retirement benefits later, potentially at age 70 when they've reached their maximum amount.
Widowhood and Survivor Benefits
Survivor benefits are crucial, especially for women who tend to outlive their husbands. As a widow or widower, you're entitled to receive the full benefit amount your deceased spouse was receiving at the time of their death.
However, there's a catch. If your spouse claimed their benefits early (before their Full Retirement Age), your survivor benefit might be reduced. This is due to a complex calculation called the RIB-LIM formula.
To maximize your benefits as a widow or widower, consider these strategies:
- You can claim survivor benefits as early as age 60 (or 50 if disabled)
- You might choose to claim survivor benefits first and then switch to your own retirement benefits later if they're higher
- Delaying your claim until your Full Retirement Age can ensure you receive the maximum survivor benefit
Recent Changes to Social Security Rules
The Social Security system has undergone significant changes in recent years, primarily due to the 2015 Bipartisan Budget Act. These changes have affected how married couples can claim benefits:
- The "file-and-suspend" strategy is no longer available for most people
- New rules apply for evaluating eligibility at Full Retirement Age
- While you've suspended your retirement benefit, your dependents can't claim benefits based on your record
These changes make it more important than ever to carefully consider your claiming strategy.
The Future of Social Security
It's worth noting that the Social Security system faces long-term financial challenges. The 2015 Social Security Trustees report revealed a continuous fiscal deficit of $26 trillion. To address these issues, potential future changes could include:
- Increases in Social Security taxes
- Changes to the benefit structure
- Adjustments to retirement ages
While these changes aren't certain, they underscore the importance of staying informed about Social Security rules and planning carefully for your retirement.
Remember, your marital status can significantly impact your Social Security benefits. Whether you're married, divorced, or widowed, understanding these rules can help you make the most of your benefits and secure a more comfortable retirement.